Orange County FHA, VA & First Time Buyer Loan Information

My goal is to provide valuable information for home buyers, both First Time Buyers and Move Up Buyers. This information will be about loan programs such as FHA ,VA, Conventional Fannie Mae and Freddie Mac, Reverse Mortgages, and even Portfolio Jumbo programs. I will also touch on tax advantages of homeownership, Rent vs. Own analysis, and any other aspect of loans and home ownership that will be of interest to Orange County home buyers and homeowners.

Who is responsible for paying the closing costs for the home buyer on a VA Loan in Orange County, CA? Many real estate agents and the Veterans who are buying the home assume the buyers costs need to be paid by the seller. Or that certain costs, such as the "non-allowables" need to be paid by the seller. This common misconception can make it tough to get an offer to purchase a home accepted if the listing agent assumes the their seller will be paying costs that they wouldn't need to pay with other offers.

What are "Non-Allowable Costs"?

"Non-Allowables" refer to certain closing costs that the Veteran, in certain situations, cannot pay. This would mean that either the seller, the real estate agents, or the lender (using a lender credit), need to pay them. Non-allowable costs include the escrow closing fees, lender fees, termite inspection, and a few other fees. However, there is a "loop hole" that allows for the Veteran to pay non-allowables from their own funds.

When Can a Veteran Pay Non-Allowables?

There are times when the Veteran can pay non-allowable closing costs. VA has always allowed for a 1% Loan Origination Fee. However, many lenders do not charge a 1% Origination Fee. In this case, VA allows the Veteran to pay up to 1% of the loan amount in what would have been non allowables costs. This may not help too much in some low cost areas of California, but in the higher costs areas of the state, like Orange County, 1% goes a long way. For example, for a Veteran buying a home in Irvine for $500,000 would be able to pay $5,000 (1% of $500,000) towards non allowable closing costs. In most cases, the non allowables should be less than $5,000. (If the non allowable costs are more than $5,000, you should probably check with a few different lenders). High Cost California VA Loan Limits listed by County.

Why Would the Veteran Want to Pay the Non-Allowables?

Getting an offer accepted in the current Orange County real estate market is not easy. Multiple offers, all cash offers, Conventional loan offers, and even FHA offers all can make a VA offer look weak if the Veteran is asking for closing costs. But if the Veteran is working with a real estate agent who is familiar with VA financing and a lender who is a VA loan specialist, then other options can be provided which can help make the offer competitive with other financing offers. Many times it is possible for the lender to even offer a scenario that would allow for enough lender credit that the Orange County Veteran will need no money to close escrow, even when the seller is not contributing a dime towards closing costs.

VA Loans are Easy. Really!!!

Closing a VA loan is easier than other types of financing in many respects. The only real difference between a VA loan and other types of financing, as far the the seller is concerned, is the requirement for a clear termite report. One of the most difficult things in mortgage processing is the documentation of funds to close. Following the paper trail can be difficult. In many situations with VA financing there are no funds even needed for closing,which makes approval that much easier. 30 day closings for a VA loan are easy if being handled by an experienced Orange County VA lender.